KLA-Tencor Corporation (KLAC)
Interest coverage
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | — | 3,505,050 | 4,086,130 | 3,649,580 | 2,517,780 |
| Interest expense | US$ in thousands | 302,166 | 311,253 | 296,940 | 160,339 | 157,328 |
| Interest coverage | 0.00 | 11.26 | 13.76 | 22.76 | 16.00 |
June 30, 2025 calculation
Interest coverage = EBIT ÷ Interest expense
= $—K ÷ $302,166K
= 0.00
The interest coverage ratios for KLA-Tencor Corporation over the recent fiscal years demonstrate notable fluctuations, reflecting changes in the company's ability to meet interest obligations from its earnings before interest and taxes (EBIT).
As of June 30, 2021, the interest coverage ratio stood at 16.00, indicating that the company generated sufficient EBIT to cover its interest expenses 16 times over, which suggests a comfortable margin of safety and a strong capacity to service debt obligations at that time. The upward trend continued into June 30, 2022, when the ratio increased significantly to 22.76. This improvement signifies an enhancement in profitability relative to interest expenses, implying a very robust capacity to meet interest payments during this period.
However, a notable decline is observed by June 30, 2023, with the ratio decreasing to 13.76. Despite the reduction, the ratio still retains a strong coverage buffer, but the downward trend flags a relative weakening in the company's ability to service interest compared to prior years. The further decline continues in June 30, 2024, with the ratio decreasing to 11.26, signaling a continued reduction in margin of safety and potentially indicating rising interest expenses, declining EBIT, or both.
Most notably, by June 30, 2025, the interest coverage ratio drops to 0.00. This indicates that the company's EBIT has been insufficient to cover interest expenses entirely, effectively implying that the company either had no interest expenses or was unable to generate EBIT to meet those obligations during that period. Such a scenario could reflect significant financial distress or extraordinary circumstances affecting earnings.
Overall, the data portrays a trend from strong interest coverage levels in 2021 and 2022 to a progressively weakening position in subsequent years, culminating in an apparent inability to cover interest obligations by 2025. This progression warrants attention as it could impact the company's creditworthiness, cost of borrowing, and overall financial stability if the trend persists.
Peer comparison
Jun 30, 2025